New Book Tells Tech Titan Origin Stories

These are the founders and earliest employees of PayPal. We're talking about people like Elon Musk, Peter Til, David Sachs, Reid Hoffman, and more that probably aren't household names to many people out there, but before they became incredibly wealthy and built some of those other companies, they weren't work building PayPal. Jimmy Sony is the author of The Founders. It's the story of PayPal and the entrepreneurs who shaped Silicon Valley. He joins us live in the Bloomberg eleven

three oh studios here in New York. Jimmy, how are you. I'm doing well. Thank you for having me. Yeah, well, thanks for joining us. Congratulations on the book. It came out just a few days ago. Um. I'm wondering at what point because you've written a few books. At what point did you decide that the story of the PayPal's

origin story was a story that you wanted to tell. Yeah, you know, my m O for books is I kind of looked for the empty space on the bookshelf, like I'll go on Amazon and just see what I want to read about, and if I can't find the topic, I will add it to a Google doc. That is, you just sort of titled books books someone should write, and then I just keep going until I find a book or someone find out someone's working on a book

with this one. I just thought that, given the number of figures in here who have gone on to do such interesting things, that like, someone was working on this, and when I found out that no one was, I just kind of kept knocking on doors until I started doing the project and tell us a little bit about this group of people, the PayPal mafia, because like Tim said, there are some household names in there. I mean Elon Musk, Peter Tiele, for example, But what is the common denominator

when you look across them. Yeah, you know, the one thing I say is I wish we could retire the term PayPal mafia. I know, that's the way they're known. But I think PayPal diaspora is more fitting. I had a couple of people tell me what for one thing like, we're not as cool as a mafia, so we're just a group of big, you know, sort of big lovable nerds.

The other is it sounds more sinister, right most of these people, like the people who built YouTube, the people who built LinkedIn, like these are these they they didn't set out to sort of like do something like elicit in the world. Um. I I would say there's several common denominators. A few that stood out to me when

I did the research. One is unexpected, but but a real love of like puzzle solving, chess playing, poker playing, game playing like this kind of uh where where intelligence and competitive meat at the spot in the event diagram That was a big part of this. I would say. The second thing is a very very very high bar for intelligence, Like every person I interviewed had just was like would run circles around me, right, So I was

like the B student writing about the A students. Um. The last piece I think is is a little bit harder to define, but it's this predisposition to want to build a solution to a problem as opposed to like go and research and figure out what the solution should be. I actually had an engineer, Eric Client say to me too that even after PayPal experience, even today, his instinct is to invent, not research and implement. Interesting Hey, Jimmy, UM, we have a couple of minutes with you here, then

we're gonna do some news. Then we're gonna come back and get a lot more time with you. UM. I'm wondering about when it comes to the individuals, the household names who we know you you're reporting on this, You spoke to them, you went out and met with them. Um. Was there anyone you didn't talk to that you wanted to speak to because we're talking like you know, you spoke to Peter till you spoke to Elon Musk. Yeah,

I would So I did. You do two hundred and sixty interviews for this over the course of five years, and I was really fortunate. I was able to talk to everyone I wanted to speak to. There was one person I didn't get to get in touch with, and it was because of circumstances. There was a young engineer named Robert Fresa. He passed away while working at PayPal, and he was an exceptional mind, I mean really was loved within the company. But he passed away when he

was just shy of twenty two years old. I tried to memorialize him in the book, and I actually spoke to his father, but understandably I wasn't able to speak to him. But otherwise everyone was pretty open about speaking to me. How did you get just in the last thirty seconds that we have with you and then we're gonna come back for more, how did you get everyone to speak with you? Dogged persistence and a lot of

cold emails and a lot of luck. Um. I would also say I had the fortune of writing about something that happened twenty years ago. So I'm not writing about Tesla or SpaceX or a firm or palatiner or anything. I was writing about something that, for a lot of these people is in the rear view mirror. Um, Katie,

I know you wanted to ask about some early PayPal employees. Well, again, when we look at the roster of who's involved here, I mean Elon Musk, Peter Till, I feel like we talked about them every other day, but who was involved that we don't talk about who isn't a household name, who is important to this story. Yeah, you could argue that is the most consequential people in the company are

not household names. Um. I was really fortunate. I would often send cold emails to employ ease and I would get a favorable response back, and the first thing they would say to me is, no one has ever asked me about my PayPal experience before. And I found this like astonishing, right, just given what these people have gone on to do. Um. One of the people I interviewed that I found most exceptional was a woman named Amy Rowe clement Um. She is very early at X dot com.

Ellen does his signature kind of pitch for her to join. She signs up instead of explain what X dot com is. Yes, X dot com is one of the predecessor companies that becomes PayPal. So PayPal is really the fusion of two companies. One is called X that was founded by Elon Musk. The other is called Confinity, and it was founded by

Peter Thiel and Max Lovechin. And so she joins X dot com instead of going to graduate school, and she becomes one of the signature leaders in the product team and the way she describes her role like really stuck with me. She said, it was a mix of operator, therapist and historian. Um and I found her and not just myself, but my reporting. In my reporting, I found many employees looked to her for leadership, moral leadership, just

someone who could help fix problems. She was the person in the organization that basically made the whole place function because you can imagine a lot of mega up personalities, a lot of my que points in the room and within that I had multiple people say to me, you know, Amy is part of the reason this place did not combust on itself, Like she really held us together. She's one of the people that I think is And by

the way, these aren't my words, Elon Musk's words. She is an unsung hero in this story, has never gotten recognition. Another person. You know, they're countless people. I can go on the list, but there's plenty of people like that. We're gonna talk more about that in just a few minutes when we come back with Jimmy Sony. He's the author of The Founders, the story of PayPal and the entrepreneurs who shaped Silicon Valley. You're listening to Bloomberg Radio.

This is Bloomberg. I want to get right back to our next guest, Jimmy Sony is the author of The Founders, The Story of PayPal and the Entrepreneurs who shaped Silicon Valley. Jimmy, what strikes me reading this is how far ahead of their time the folks who uh in the origin story of PayPal were in terms of thinking about payments, in terms of thinking about sending money from one person to another. I mean we're talking like, you know, more than a

decade before ven Mel, which became a PayPal company. We're talking before cryptocurrency. They're talking about cross border payments. What were they onto? You know, you nailed it on the head. Like. One of the things that's most impressive about this group, particularly the earliest people who constituted the company, is that they could almost see into the future. Right, So I'll give you the best example I can give you. Elon names his company X dot com. He thinks it's what

he calls the coolest U R L on the Internet. Well, by the way, he loves X. Right, He's got the Model X with Tesla, He's got his kid who's named X, and he repurchased the X dot com domain a few years ago from PayPal. Uh, and he thanked them for letting him buy it. Here's the thing. You go a level deeper and you ask him why. One of the things he says is how many characters is X period

C O M. It's just five characters. If you're on a mobile phone and you're on a browser and you're trying to access your entire financial life, that's just five taps of the year was this. This is talking mobile phone. He's talking mobile phones and acts. Seeing your entire financial life on your phone like that is a far reaching, future oriented vision for finance at a time when people are just getting comfortable putting credit cards onto websites Like that is part of what I saw with person after

person in the stories. They were really thinking decades ahead. And Jamie, there's so much amazing reporting in this book. There's so much color. You have a whole chapter on sort of the back and forth about what to actually called PayPal. To describe that a little bit, Yeah, it's one of my favorite stories in the book. There's Uh,

Max Legend and Peter Tiel name their company Confinity. Confinity, which is a multiple syllables and starts with the word con is not a good look for a financial company. So they look for a branding firm to help them, and they find the firm Master McNeil. It's run by a woman named Esby. Master Esby has a mix of a Harvard m b. A and a background in like literature and poetry and a real love of language, so she blends the humanities and it's very sort of rigor

for business. She is the person who comes up at the PayPal name, and it's not a quick process. She goes through hot She and her team go through hundreds of names. They pare them down. Among the finalists were Momo cash, a E money Beam and and PayPal money Beam. And what she and I walked through, her thinking on it, her explanation of it, the the alliteration of pay and pal. The interesting thing is the edit. PayPal was originally supposed to have a lower case P in the middle, and

the reason is because of visual symmetry. If you have an upper case P at the beginning and at lower case L, you got two ascenders. If you have two lower case letters in the middle, you have two descenders. Someone and we looked in the files, someone capitalized the middle P, and in her files it just says, chose PayPal with a capitalized middle P, and that's stuck for the next twenty years. And visually it worked. It worked, I mean, I think it works anyway. People seemed to

warm to the name. They really liked it was friendly, It had what she called to plosives, meaning the ps or plosives you stop the air, so it helps you remember the name. And mostly I think everyone on the team was just grateful that the company wasn't called Confinity anymore. How did they battle fraud early on? Yeah, so they build a payment system without expecting anybody to use it. But what happens if you throw a party and literally the entire world comes and starts to take things from

your house, which is essentially what happened. They use a mix of human fraud fighters, who are some of the most interesting people I interviewed, because they were like, you know, talking to lawyers and talking to secret service agents and talking to the government, as well as analytic and big data tools that PayPal builds to find bad actors and then figure out how to bring them to bring them

to justice. Uh. It's I think some of the earliest application of that technology and some of the most interesting stuff that I had a chance to dive into. And I mean one of the choices about having you in studio with us is a You're very charming b is that we were chatting a little bit about the date that you published February two thousand, twenty two. Why that date, Well, it's one week after the company the anniversary of the company's I p O U, which was February two thousand two.

And I found among this group of people a real love for numbers, puzzles, little hidden things, and so my one small homage to that was to two, which was just like, it felt fitting that the date was something of a palindrome, at least if you shortened the years. Uh. And then when I was growing up to I just like the number twenty two because EMT. Smith on the DLAs Cowboys was twenty two, and that was like a

number I had on my my wall. So I thought that it had all this like wonderful feeling about it, and then you know, it just it worked because of the love of numbers of this group of people. So it's not the only Easter egg in the book. We also got to talk with you during one of the breaks about, you know, a five year labor of love such as this. Um, what can you tell us about the Easter eggs that you kind of distribute throughout the book. Yeah,

I'll share a couple of them. There's this thing in books called the end papers, which are kind of the one half adhesive one half it's not adhesive. It's like the first physical page in the book. If you look at it, you will see a name followed by a company name. I tried to list as many employees as I could who worked there, followed by a company that was either founded in or directly invested in by one of the people who are alumni. And it's an incredible list.

I mean, it's an amazing lists. By the way, it's not a for profit companies. Kiva, Dotto Work, the micro Lending micro finance website is founded by Prummel Shaw, who is an alum from this company. H There are authors in this company, film award winning film producers in this company, and so I tried to do some of that. The second Easter Egg is an elaborate, multi hundred page secret code that I buried inside the book, which has been

it has been cracked by one person. There's one person who has cracked the secret code, and that person is the co founder of the company and a code cracker, extraordinary, Max Levchin. That is incredible. I have not cracked the code yet, had to say, but I do want to ask. I mean, you interviewed so many former employees from PayPal, and when we talk about companies that came about in the late nineties, early two thousand's, uh, there were a

lot of busts. I'm curious, you know, did any of the employees that you talked to express surprise that, you know, PayPal is still so dominant, so prominent that it is. You know, it's a great question. I think that there's a handful of employees who actually predicted that the growth and the network effects that they created in the early

two thousands would carry them forward this far. I would actually argue that when they were living it, it was more of a sense of relief that they survived the crater ring of the dot com bubble, and so it was relief in the moment, and I think there is you know, there's appreciation that it lasted as long as

it did. But actually when they ran the analytics back then, I had a couple of employees tell me they were like, you know, we had spreadsheets that showed with the value of the company would be in two Jimmy, just in the thirty seconds that we have left with you, what are the white spaces that you're saying that need to be filled? Next, I know you're taking a break after this book. It was five years in the making. But where are your interests right now? Yeah? I've become really

interested in criminal justice reform. The concluding chapter of this story is actually about how the PayPal mafia narrative finds its way inside a prison involved in just outside of Baltimore and Jessip Maryland and these two young prisoners, both serving life sentences, were super inspired by the story, and I just learned a lot about the prison system, and I think that's maybe where I wanted to devote some attention. Next,

that's Jimmy Sony. He's the author of The Founders, The Story of PayPal and the Entrepreneurs who shaped Silicon Valley. The book just coming out in the last few days. You can check it out at your local bookstore. This is Bloomberg Radio. This is Bloomberg Business Week. Catch Sound On with Joe Matthews lsssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssssss